Finland Wants Euro Pact Ready for a Snowy Day: Pasi Kuoppamaki
Finland lies between the dear but occasionally erratic Russia and the democratic West; and the European Union ties Finland to the West. The euro itself was adopted here without a referendum, reflecting the Finnish government’s aim to be part of the EU core.
Finland would like to stay in the core, where the future of the euro is forged -- but not if it means total surrender of fiscal power to Brussels.
We are ready to give up some sovereignty to the EU, but only if it comes with a system that guarantees compliance and also leaves a strong voice to small creditworthy nations. Finns do not want large countries to be able to twist outcomes in their favor and dilute penalties for rule violation.
Finns do not share Germans’ abhorrence of strong monetary stimulus, but we still don’t think it would be wise to give politicians free rein over the European Central Bank. Low inflation and interest rates are appreciated, but there should be more control over the use of cheap credit.
In Finland, we understand the need to build up stocks to prepare for winter. That’s why we would like to see an EU that prepares for the next crisis, rather than live day to day in futile hope of stronger economic growth next year.
Risk-management tools, such as the European Financial Stability Facility, the EU’s bailout fund, are much needed, but Finnish taxpayers need to know what burden they are expected to carry. We generally see the benefit of paying high taxes, but don’t fully trust bureaucrats in Brussels to manage our hard-earned money productively and transparently.
Finland also has a tradition of strict compliance with the law and agreements. In the 1930s Depression, ours was the only country that paid back its reconstruction debt to the U.S. -- on time and in full. We also managed our deep economic depression during the early 1990s with no outside help. Since then, however, the rise of Nokia Oyj and a strong economic boom have made us complacent. Like too many other euro countries, Finland is aging, and slipping behind in competitiveness. It would benefit tremendously from a thriving euro area.
There are legal impediments to making swift changes in the European Stability Mechanism, the euro area’s permanent rescue fund. The Finnish government insists that Finland cannot accept a rule that would allow the majority of countries to decide on the ESM’s use unless two-thirds of Parliament agrees to change the Finnish constitution. Opposition parties may well vote against such a change.
Two-thirds of Finns would like to save the euro, according to a recent survey. And no wonder: The euro has increased trade and tourism, and the younger generation has already grown up with it. We would like to see a euro area that promotes free trade and stability, both in the economy and the wider geopolitical environment.
(Pasi Kuoppamaki is the chief economist at Sampo Bank in Helsinki. The opinions expressed are his own.)
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